Financial Crisis Hits Insurers
Things have been quite hectic around here as of late. My apologies for not keeping the blog active. Clients come first and, fortunately, business is good.
In the meantime, the the financial markets have been in a real crisis and major commercial banks and investment banking firms are on the skids. Some pundits are forecasting the crisis to impact the auto industry even harder than the housing sector.
How about the insurance industry? We know AIG took a tumble. Is that all?
No, employers need to brace themselves for a broad impact on mainline insurance companies like MetLife, Aetna and Cigna just to name a few. Insurance companies hold financial assets as reserves to offset their long term liabilities. Unfortunately, these assets are the same ones that have dramatically fallen in value just like our 401k accounts.
In years gone buy, this would not have been such a big thing. Most of these insurance companies were mutuals. However, their stock is now publicly traded and this means they have investors looking at their quarterly financial results. This short term pressure will lead them to raise product pricing as a way to make up for investment losses. So, hold on to your check book during renewal negotiations. The market may get a little tighter.
Comments
Rick, I'm so glad to have stumbled upon this, and learned that you've now got a blog. Good for you for sharing your vast expertise this way. I'll be returning regularly to learn something about your industry, and I'll be sure to point others to it as well. Regards.
Posted by: John Ettorre | October 30, 2008 02:25 PM